After Insurers’ Protest, Fla. House Committee Keeps Tax Break

Responding to protest from insurance companies, members of a Florida House committee changed a piece of fast-moving Florida legislation and upheld a tax credit for carriers targeted for removal that they said would make the state more unsavory for business.

The bill, formerly SB 7132 and now SB 1832, passed the state Senate with a unanimous 39-0 vote on Wednesday before its first appearance before a House committee, which reported an amended version favorably Friday with a 26-0 vote.

The original piece of legislation, which nixed the tax credit, was amended to preserve the tax break while restoring vehicle registration fees and surcharges to lower, pre-2009 levels.

The move is likely popular among lawmakers looking to vote for a money-saving measure for their constituents. The bill was just introduced on April 2 and netted only one dissenting vote against it during its time so far in the Legislature, with a 16-1 vote on April 18 in a Senate committee.

But insurance companies disagreed with the benefit of eliminating the tax break they have gotten in Florida since it was established in 1987. The credit is for 15 percent of an insurance carrier’s salaries it pays to employees based in the state.

“[Insurers] have consistently placed clean, high-wage and sustainable jobs in the Sunshine State,” Donovan Brown, state government relations counsel for the Property Casualty Insurers Association of America (PCI), said in a statement. “Florida businesses are already taxed enough, and removing this tax credit would hamper job growth within the state.”

Bill Lays Out New Fee Structure

The bill advanced by the House Appropriations Committee on Friday contained an amendment that staggers the fee to drop annually; the original bill had set all the fee decreases to occur on Sept. 1.

Under the amended bill, the charges and fees would fall according to the following schedule:

Registration service charge: Would drop from $5 to $4.50 next July, dropping another 50 cents every July until 2018, when the charge will be $2.50.

Validation sticker service charge: Would go from $3 to $2.60 next July, dropping another 40 cents every July until 2018, when the charge will be $1.

Registration sticker fee: Would go from $1.50 to $1.30 next July, dropping another 20 cents every July until 2018, when the charge will be 50 cents.

License tax surcharge (portion going to State Transportation Fund): Would go from $4 to $3.60 next July, dropping another 40 cents every July until 2018, when the charge will be $2. Part of this surcharge would go to the State Transportation Fund.

License tax surcharge (portion going to Department of Juvenile Justice): Would drop from $5.50 to $4.60 next July, dropping $1.10 every July until 2018, when the surcharge will be $1.

When the fees and surcharges reach the proposed 2018 levels, the total annual decrease to the amount paid for vehicle registration will be $12.

In the latest legislative analysis, which was published before the committee’s amendment scheduling the fee decreases over several years, the swap would mean around $180 million more for the fiscal year 2013-14 and $7.2 million on a recurring basis for the state’s general revenue fund.

In 2009, vehicle fees were hiked to their current levels to match falling revenues amid a poor economy and “difficult budget year,” according to Sen. Don Gaetz (R-Niceville), who is also the president of the state Senate.

Sen. Joe Negron (R-Stuart), the sponsor of the initial SB 7132, said removing the tax credit while reducing fees was a “revenue-neutral” move that would benefit “every Floridian who drives a car.”

Lawmaker Called Tax Credit ‘Outdated’, Insurers Said It Lures Business

Negron called the insurance tax credit, which amounted to about $230 million in salary credits last year, “outdated.”

But obtaining a tax break has been an “overarching consideration” for insurers looking to do business in the Sunshine State, according to PCI.

“And we believe it is working,” said Brown.

About Charles Nguyen

Charles Nguyen is an enterprising journalist who reported for Patch.com and the Desert Dispatch and was the editor in chief of the Guardian (the twice-weekly newspaper at the University of California, San Diego) before coming to Online Auto Insurance News.